Full length articleInvestor perception and business method patents: A natural experiment

The 1998 State Street Bank & Trust Co. v. Signature Financial Group court case is largely responsible for opening the door on the issuance of business method patents, while the 2008, in re Bilski decision closed it (at least partially) once again. The result of the first decision was a significant increase in the number of patents issued and law suits filed for infringement. This paper is the first the authors are aware of to utilize these court cases as natural experiments to gauge investor belief regarding the utility of business method patents on publicly traded companies. We find that investor beliefs about the effect of business method patents on company value evolved between 1998 and 2008, as investors modified their expectations for the effects of the in re Bilski decision based on what actually occurred after the State Street decision. We also find that investor sentiment varied by industry subsector. Our findings offer insights into the ongoing debate over the utility of business method patents, which may inform managers, investors, and both statutory and regulatory policy makers.